The Systems View, Part III: Social Security “Reform” is Not Advisable

In Part II of this series, we saw seen how the money in individual retirement accounts is, in effect, destroying our economy, our environment, and our health. In this post, we’ll discuss the impending disaster that is being planned under the name of Social Security “reform”.

Originally published 2005

Like the idea of instituting personal retirement accounts for public employees instead of pensions, the idea of privatizing Social Security is a monumentally bad idea. Instead of the billions that are currently in the hands of financial management companies, they will control trillions.

Right now, the billions controlled by financial management agencies force corporations to favor short-term results over long-term thinking. But when they control trillions, corporations will lose any pretense of long-term planning. They’ll have to focus on quarterly profits pretty much to the exclusion of all else. So from a General Systems perspective, the idea is just horrible.

But even if you’re thinking about your own retirement and nothing else, the Republican plan for social security “reform” is just plain bad. It would be more accurate to call it, Social Security Destruction.

If you like that plan to secure your own financial future, you have to take it as an article of faith that, since the stock market has always gone up over the long term for the last hundred years or more, it therefore always will. But now is a particularly bad time to make that bet:

Impending environmental scarcities suggest that, sometime in the next 25 to 50 years, the economy may begin a rather precipitous decline.

A variety of corporate practices are increasing profits in the short term (making stocks go up) in ways that are ultimately detrimental to the economy (which will eventually make them come down again). Those practices include runaway tax dodges, off-shore labor, off-shoring of intellectual property, and layoffs.

For the moment, corporations are finding ways to cut costs even further, but there comes a point when the turnip has been bled to death, and there is no more blood left to give.

To engage in his foreign war, Bush has turned a $5 trillion dollar projected surplus into a $5 trillion dollar deficit. The deficit spending has been financed primarily with foreign capital.

The money that’s coming from all that foreign borrowing is making the economy look good, because corporate profits are up. But it’s not translating into a fundamentally sound economy, because the money isn’t making into workers’ hands.

In other words, our recent economic “growth” is liable to turn out to be a bubble that future generations may be paying off long after we’ve ceased to care. At that point, dollars invested in the stock market may well have turned into pennies, taking with them any chance of a reasonable retirement.